PETALING JAYA: Low-cost carrier AIRASIA Group Bhd has declared a bumper special dividend of 40 sen a share as its net profit soared 81.2% in the third quarter ended Sept 30, burnished by the proceeds from the sale of a unit to Expedia Inc.
The special dividend will go ex on Dec 12 and AirAsia had announced the disposal of its leasing unit, Asia Aviation Capital Ltd, to BBAM Ltd Partnership for US$1.18bil (RM4.619bil). At that point, analysts were speculating a windfall for shareholders in the region of 60 sen to 70 sen a share.
The sale to BBAM, the world’s third-largest aircraft lessor, will see AirAsia raking in proceeds of RM3.8bil. The deal involves the sale of 182 current and future aircraft with engines.
In a filing with Bursa Malaysia yesterday, the low-cost carrier said it was optimistic about its prospects for the remainder of the year, believing that the operating environment in the fourth quarter of 2018 would improve as compared to the third quarter, coupled with the year-end holiday season being around the corner.
AirAsia also added that the group’s load factor was holding strong.
“Going into the fourth quarter of 2018, the operating environment is seen to have improved as compared to the third quarter, coupled by the year-end holiday season being around the corner, the group load factor is holding strong.
“Our domestic market share for Malaysia is now at 58% while all the other countries have also grown domestically except for Indonesia, which remained at 2%. The overall average fares have also gone up year-on-year,” said AirAsia Group CEO Tan Sri Tony Fernandes in a statement.
He said the profitability of all airline operators have been affected by the higher global fuel prices this year and that AirAsia would be prudent by reducing none airline operating staff headcount, increasing overall efficiency and remain nimble in order to maintain healthy profit margins.
“For the full year, we are on track to achieve a group load factor target of 85%. We will continue to emphasise our One AirAsia initiatives to further reduce costs, while improving the overall operational efficiencies and actively monitor each route’s profitability. Our daily aircraft utilisation is already at 13-hours a day. We want to further improve the turnaround time and overall performance by each affiliate,” he said.
“As for fuel, we will benefit in the month of December 2018 from the recent fuel prices that have come off. We are watching the fuel prices closely to increase our fuel hedge for 2019 and 2020.
“We have already hedged 48% for Brent at US$67.24 per barrel for 1Q2019 and 27% for 2Q2019 at US$65.40 per barrel in order to better manage the volatility of fuel prices.”
AirAsia was cautious about achieving its results in 2018, as it was impacted by higher fuel prices. “However, the drop in the fuel price in December is expected to contribute positively to December’s operational results and the year 2019. Based on these factors, the board is confident that it would still achieve a net profit for the year.”
The company’s net profit for its third quarter rose to RM915.88mil from RM505.33mil in the previous corresponding period, mainly from a one-off gain on the sale of Expedia and the reversal of deferred tax liabilities arising from the disposals of aircraft.
Revenue during the quarter increased to RM2.61bil from RM2.45bil a year earlier.
“The growth was attributed to a 9% increase in total passengers carried. Overall unit passenger revenue increased by 1% as a result of the average fare increase.
“Load factor was at 82% in the third quarter of 2018, compared to 87% in the third quarter of 2017, as the increase in passengers carried was lower than the 16% increase in capacity,” it said in the notes accompanying its results.
AirAsia said its operating profit for the third quarter fell to RM253mil from RM494mil a year ago, “mainly due to the increase in fuel expenses”. It said that excluding fuel expenses, costs were fairly well-controlled, showing a reduction of 2% in cost per available seat km.
For the nine-month period ended Sept 30, meanwhile, AirAsia’s net profit grew to RM2.42bil from RM1.27bil in the previous corresponding period, while revenue increased to RM7.78bil from RM7.05bil a year earlier.
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